Correlation Between Haverty Furniture and Arhaus

Can any of the company-specific risk be diversified away by investing in both Haverty Furniture and Arhaus at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Haverty Furniture and Arhaus into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Haverty Furniture Companies and Arhaus Inc, you can compare the effects of market volatilities on Haverty Furniture and Arhaus and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Haverty Furniture with a short position of Arhaus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haverty Furniture and Arhaus.

Diversification Opportunities for Haverty Furniture and Arhaus

-0.61

Correlation Coefficient

Haverty Furniture  Arhaus

Excellent diversification

The 3 months correlation between Haverty and Arhaus is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Haverty Furniture Companies and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc and Haverty Furniture is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Haverty Furniture Companies are associated (or correlated) with Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of Haverty Furniture i.e., Haverty Furniture and Arhaus go up and down completely randomly.

Pair Corralation between Haverty Furniture and Arhaus

Assuming the 90 days horizon Haverty Furniture is expected to generate 3.63 times less return on investment than Arhaus. In addition to that, Haverty Furniture is 1.03 times more volatile than Arhaus Inc. It trades about 0.03 of its total potential returns per unit of risk. Arhaus Inc is currently generating about 0.1 per unit of volatility. If you would invest  993.00  in Arhaus Inc on November 28, 2024 and sell it today you would earn a total of  198.00  from holding Arhaus Inc or generate 19.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	39.66%
Values	Daily Returns

Haverty Furniture Companies  vs.  Arhaus Inc

Haverty Furniture

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Haverty Furniture Companies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Haverty Furniture may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Arhaus Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arhaus Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical indicators, Arhaus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Haverty Furniture and Arhaus

The main advantage of trading using opposite Haverty Furniture and Arhaus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haverty Furniture position performs unexpectedly, Arhaus can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Arhaus will offset losses from the drop in Arhaus' long position.

The idea behind Haverty Furniture Companies and Arhaus Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.